Auto-Trade is a service offered by several on-line brokers. Auto-Trade makes it possible for an investor to carry out an options strategy in his own account without becoming an options guru or making all the trades on his or her own.
This is how it works. First, you subscribe to an investment newsletter (we hope you will pick Terry’s Tips, but there are dozens of others you can choose from as well). Then you sign an agreement with a broker which authorizes him to make trades in your account in accordance with recommendations made by the newsletter. You specify how much you cash you would like to allocate to the newsletter’s recommendations.
Terry’s Tips operates a little differently than most newsletters. We maintain 4 actual portfolio accounts (using different underlying stocks or ETFs and risk levels). When you sign up for Auto-Trade at a broker for the Terry’s Tips newsletter, you tell the broker which portfolios you would like to mirror, and how many “units” you would like to employ. For example, if we have a portfolio that would require $10,000 to mirror, and you would like to invest $20,000 in that portfolio, you would select 2 units.
Terry’s Tips is also different from other newsletters in two important ways. First, since our portfolios are actual broker accounts, we account for all commissions. Many newsletters display their results and do not account for commissions. This is extremely misleading because commissions on option portfolios can be huge – sometimes 20% or more over the course of a year. Our results are always net of commission costs.
Second, Terry’s Tips portfolio results are an open book. We believe in full disclosure. Insiders can see every trade ever made in every portfolio. Nothing is swept under the rug. Other newsletters may tell you only about the one portfolio you have signed up for, and if that one doesn’t make money for you, they might tell you that you were just unlucky because you didn’t sign up for one of the profitable ones that they conducted.